Scatec concludes refinancing of three solar assets in South Africa

Norwegian renewable energy developer Scatec has announced the conclusion of refinancing of the non-recourse debt facilities for three of its solar power plants in South Africa with lenders. The solar plants include the 75 MW Kalkbult solar plant, the 75 MW Dreunberg solar plant in Eastern Cape and the 40 MW Linde in the Northern Cape province of South Africa.

Scatec’s share of proceeds from the refinancing, based on its 45 per cent ownership in the power plants, amounts to ZAR 540 million (USD 36 million).

Key amended terms include increased debt amounts, reduced margins, increased tenors, and release of cash from debt reserve accounts, implying minor impacts to expected future dividends from the power plants.

South Africa’s Department of Mineral Resources and Energy (DMRE) in 2020 embarked on a programme for voluntary refinancing of projects under the earlier rounds of the country’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) where IPPs were invited to partake. The programme’s aim is to reduce tariffs for renewable energy projects in earlier rounds of REIPPP, in order to make the projects cost competitive and save costs for the national power utility Eskom.

Scatec says pursuing refinancing opportunities is part of its strategy for continuous operational and financial improvements to optimise project returns and cash flows.

The refinancing will further benefit the South African authorities through a 50:50 profit split between the shareholders of the power plants and the authorities, in accordance with the Refinancing Protocol issued by the Department of Mineral Resources and Energy.

“The refinancing of our South African power plants demonstrates the funding and value creating potential of our operating portfolio when local financial markets become more mature. We are very pleased to have improved financing terms and net present values for the projects, while contributing to society through profit-sharing mechanisms,” says CFO Mikkel Tørud.